Question

Ryan Corporation began business on March 1, 2016. At that time, it issued 20,000 shares of $60 par value, seven percent cumulative preferred stock and 100,000 shares of $5 par value common stock. Through the end of 2018, there had been no change in the number of preferred and common shares outstanding.

Required

a. Assume that Ryan declared dividends of $0 in 2016, $195,000 in 2017, and $200,000 in 2018. Calculate the total dividends and the dividends per share paid to each class of stock in 2016, 2017, and 2018. Round to two decimal places.

Year	Preferred Stock	Common Stock	Preferred per share	Common per share
2016
2017
2018

b. Assume that Ryan declared dividends of $0 in 2016, $90,000 in 2017, and $190,000 in 2018. Calculate the total dividends and the dividends per share paid to each class of stock in 2016, 2017, and 2018. Round to two decimal places.

Year	Preferred Stock	Common Stock	Preferred per share	Common per share
2016
2017
2018

Answer 1

Year 2016 2017 2018 Preferred Stock 0 168000 84000 Common Stock 0 27000 116000 Preferred Common per share per share 0.00 0.00 8.40 0.27 4.20 1.16 Year Preferred Stock ol 2016 2017 2018 Common Preferred Common Stock per share per share ol 0.00 0.00 4.500.000 28000 8.10 0.28 90000 162000

Preferred dividend per share = Preferred dividend / Preferred shares Common stock dividend = Commonstock dividend / Common shares Preferred Dividend = ($60*7%) * 20,000 shares = $84,000 Common stock Dividend = Dividend issued - Preferred Dividend For instance Year 2017 Preferred Dividend is $168,000. As Preferred stock are cumulative and Company haven't paid dividend in year 2016, so in year 2017 Preferred Dividend is ($84,000 + $84,000 = $168,000) Common stock dividend in year 2017 = Total Dividend in the year Preferred dividend i.e ($195,000 - $168,000 = $27,000)